Buying a vehicle outright or leasing can both have their own pros and cons. In short, buying a vehicle means that you will own a car/van until you decide to sell it on. Leasing a van or can means you rent the vehicle for an agreed period of time (usually 2-5 years) and then you give it back after that period. Both usually entail fixed monthly payments, though the monthly cost will vary depending on whether you lease or buy.
Benefits
There are many benefits to both buying and leasing a vehicle:
| Leasing | Buying |
| You don’t own the vehicle Since you don’t own the car, you have nothing to sell when the contract expires, whether that be a petrol, diesel, hybrid or an electric vehicle. | Ownership and Equity Once paid off, the vehicle is an asset you own completely. It can be sold, traded in, or kept to avoid monthly payments. |
| Cost-effective New vehicles may be rather pricey, especially if you were to purchase one outright. By leasing, you can drive a new vehicle for a far cheaper initial cost and avoid the hassle of applying for a loan or hire purchase agreement, which could result in higher monthly payments. | No Mileage Limits Unlike leasing, you can drive as much as you want without penalty. |
| Fixed monthly payments You will always pay the same amount each month because your lease’s monthly rentals are fixed for the term of your contract. You can manage your finances and keep to a budget since you always know how much and when to pay. | Lower Long-Term Costs Although upfront costs are higher, purchasing is generally cheaper over the long term compared to leasing, especially if you keep the car for several years. |
| Fully Inclusive Road tax, manufacturer’s breakdown cover and free delivery – all included. Most mechanical issues will be covered by the manufacturer’s warranty, which is provided in most cases. A maintenance agreement may also include cover for other standard upkeep and repairs. | No “Wear and Tear” Charges You are not charged for minor damage or excessive wear when you return or sell the car |
For vehicle leasing, you also have the added bonus of the business tax advantages, customers that use business leasing can benefit from significant tax breaks by reclaiming up to 50% of the VAT on the vehicle rentals or up to 100% of the VAT on commercial vehicle rentals.
Drawbacks
Whilst both options do have their benefits, there are some drawbacks of both:
| Leasing | Buying |
| You don’t own the vehicle Again, this is positive you also have the negative impact that you will be paying for something that will never fully be yours. | High Deposit Costs Initial deposits when purchasing a vehicle can be 10/20% of the vehicle value. For new (not used) vehicles this can be substantial. |
| Mileage Limits Many leases are set to a pre-agreed mileage agreement. Going over this can result in additional charges. | Depreciation Vehicles are depreciating assets, losing a significant portion of their value, especially in the first three years. |
| “Wear and Tear” Charges Many lease vehicles have a fair wear and tear policy. Meaning there could be charges if the vehicle is returned in poor condition. | Maintenance and Repair Responsibility for all maintenance, repairs, tires, and service costs lies with the owner, which can be expensive. |
| Early Termination Unless you have an early termination agreement, you may incur additional charges. | Missed Payments Failure to keep up with finance payments can lead to repossession and damage credit scores. |
Choosing the Best Path for You
Ultimately, the decision between buying and leasing comes down to your financial priorities and how you plan to use the vehicle. Both options offer distinct advantages and a few potential hurdles depending on your circumstances.
Leasing is an excellent choice if you prefer lower initial costs, fixed monthly budgeting, and the ability to drive a brand-new model every few years without the hassle of selling it later. It is also particularly attractive for businesses due to significant VAT reclamation benefits. Whether you are looking for a personal car or a commercial van, we can help you make that decision and get you to the best solution for your needs.
